When it comes to procurement and supply chains, your first thought may not be an insurance underwriter. However, for Hiscox Limited, one of its significant outgoings is the procurement of services, so when it came to renewing its tech stack, a modern source-to-pay (S2P) system was vital. So, Hiscox overhauled its procurement tech with Ivalua.
The Bermuda-based underwriter, best known for its property and casualty insurance products aimed at companies and high-net-worth individuals, turned over around $4.5 billion in 2023. In terms of procurement of services, it spends around $400 million a year.
With almost 10% of its revenue being used to hire freelancers, contractors, or other companies to provide services, getting the best value for money is vital, explains Karl Poulsen, the group chief procurement officer at Hiscox.
“That’s a lot of money for a company of our size,” he adds. “The more we can make that work harder for us means that my colleagues in the front office have more margin to play with, and we can help our customers a bit more.”
He identified “a number of pain points” across the organisation and set about building a “coalition of support” among firm leaders.
Poulsen outlined several goals, including consolidating multiple disconnected systems into a single platform, which would allow Hiscox to onboard its 4,000+ network of suppliers. The platform also needed to generate purchase orders and process invoices. With over 3,000 staff set to be onboarded, whichever platform Poulsen selected also needed to simplify processes and offer a consistent user experience.
Eventually, Poulsen and his team settled on a solution from Ivalua. To ensure buy-in across the organisation, the CPO says he made sure to “bring key stakeholders together and take them on the journey of deciding the Ivalua solution was the right solution for us.”
Tender loving care
Hiscox has over 1.5 million retail customers in different countries and offers specialised insurance products for businesses and individuals.
It began the tender process in 2022 and announced French procurement tech provider Ivalua as its partner in June 2023. Founded in 2000 by former PwC consultant David Khuat-Duy, Ivalua offers global procurement solutions to major brands, including L’Oreal, Ikea, Michelin, and Rolls Royce.
Speaking at Ivalua NOW Europe, in the shadow of the Palace of Versailles in Paris, Poulsen is unable to discuss the tender process in detail or name who rivalled Ivalua for Hiscox’s procurement business, but he praised the French firm for its support in implementing its S2P solution.
“The Ivalua procurement execs were really keen to land Hiscox’s business, and that came across in all our interactions with them,” he says. “They also helped us secure that high-level buy-in.
“When you’ve got folks around the senior table discussing this sort of change, they are conscious of what can go wrong, so they are looking for reassurance.
“Ivalua has been really helpful in sharing perspectives from other users as to what the system does and some of the challenges with integrating it.”
For Poulsen, getting a solution that was ready “straight out of the box” was vital as the firm wanted to implement and integrate it quickly. Having signed the deal in the summer of 2023, it had already switched on the systems by the start of this year.
Data was also a vital component for Hiscox. Insurance is a highly regulated market, and regulations can be complex and vary across different markets. Operating on a global scale means a lot of data needs to be managed, and contracts with suppliers can be extremely complex.
Any system it adopted needed to allow the procurement team to do the correct due diligence relevant to whichever market the supplier was operating in.
“That was one of those fundamental requirements in our tender. You need to be able to do due diligence and hold it up against what is often a quickly moving regulatory environment. Ivalua was able to show good credentials in financial services in many of those markets that we operate in.”
Record keeping is also a major challenge that the insurer wanted to bring in line.
“Data quality with an implementation like this is extremely important because you don’t want multiple [duplicate] records flying around,” Poulsen explains. “With quality datasets, you can get great insights into not only the amount you are spending on suppliers but also what you’re actually spending it on, like elapsed time, days taken, etc.”
Before adoption, Hiscox spent a lot of time “cleansing” its existing data before loading it into the Ivalua platform. This meant using data analysts to filter through records to find duplicate suppliers. Still, often, these would have minor variations, such as the spelling of the company name or address, making them even harder to collate.
“The assumption is that you have access to good data, but everyone makes mistakes, and these add up over time.”
So, what have been the key benefits so far? Poulsen is keen to stress that it is still “early days” but adds that the results so far are encouraging.
Read more: How IT and finance can achieve more together
Early positives
With a few months of data to measure the phase one deployment, the numbers have been “positive”. The initial deployment involved adopting the solution in the procurement team globally.
“It’s a big change, and for colleagues right across the business, it will become an even bigger change when we turn on the next bit of it, which is around purchase orders and catalogues,” he explains. Those person-to-person elements will go live in September for UK-based colleagues before a switch-on in the US in February 2025 and, finally, in Europe. We’ve got one month of actuals. But those one-month results are promising.”
For Poulsen, Hiscox’s procurement journey with Ivalua — part of a broader IT overhaul — is more than a digital transformation journey. It is also a cultural transformation.
In terms of advice, he again stresses the importance of getting buy-in across the organisation but adds that it is about understanding pain points both internally and externally — especially in procurement, where third-party usage is vital.
“You also need to look at the market, find out what the pros and cons of any solution are, and how that compares with your pain points,” he adds.
As someone who works in procurement, procuring the correct tech solution to support that part of the business means “practising what it preaches.” In other words, approach any acquisition of new tech as you would hire services from a new business.
“If you map this out with your IT team and measure it up against the needs of those stakeholders you’ve been talking to, it will be a lot more straightforward.”
